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Predicting the Future of Digital Coupons

Millennials driving a positive trend

August 18, 2015, 10:55 am
By John Karolefski

Executives in the promotion business are excited about digital coupons. These offers are placed on a grocer’s website or smartphone app; they are loaded onto a store’s loyalty card; they populate websites for coupon networks and coupon aggregators. Research by Inmar has reported a 100 percent year-over-year growth in share for overall redemption for five consecutive years.

Of course, digital coupons remain a tiny promotion when compared with free-standing inserts (FSIs) which dominate distribution and redemption. But there are three reasons to be optimistic about the future of digital offers.

Let’s start with the Millennials. This demographic group is on its way to surpassing Baby Boomers in numbers and grocery buying power. Millennials are starting families, thus expanding the shopping basket with diapers, baby food, breakfast cereal, and so on. But Millennials generally don’t read the Sunday newspapers whose readership is steadily declining. So they are not seeing the FSIs, which traditionally have been gold nuggets to other shopper segments.

On the other hand, Millennials are the digital generation clutching smartphones and tablets wherever they go. Digital coupons delivered to these devices are a natural. That is good news for the future of these offers.

Many digital coupons are loaded onto a grocery store’s frequent shopper card. Inmar says digital paperless Load-to-Card (L2C) coupons doubled their share of overall redemption as these offers posted their fifth consecutive year of growth in redemption. Grocery retailers who have made these coupons a key feature of their frequent shopper programs are benefiting.

If Millennial shoppers are members of the store’s loyalty program, that’s good news. But what if they aren’t? Enter digital coupons loaded onto a credit or debit card. Many shoppers – not just Millennials – pay for their groceries with one of these cards. Such a vehicle for digital coupons may prove to be better than a loyalty card. Kroger links digital coupons to its Kroger Plus credit card. Expect an announcement next month about another major grocery company offering the same customer convenience.

Finally, a new distribution and redemption vehicle for digital coupons is grocery shopping online and via a mobile device. Grocery e-commerce is growing. Piggy-backing digital offers makes sense, but this has yet to take off or even get started in a meaningful way. Sure, there are challenges for manufacturers and retailers in terms of distribution and redemption. But this opportunity is too big and attractive to ignore.

Bottom line: Digital coupons have a bright future.

By John Karolefski

About John KarolefskiJohn Karolefski is a veteran business journalist with 25 years of experience covering CPG, retail and technology. Over the years, he has edited several trade publications and is the co-author of three books: "TARGET 2000: the Rising Tide of TechnoMarketing," "All about Sampling and Demonstrations," and "Consumer-Centric Category Management." He has appeared on CNN, CBS Radio and BBC Radio to discuss marketing issues. He can be reached at [email protected]